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Loss Widens at Sony

Excluding favorable exchange rates, sales rose 2%.



loss widened in its fiscal fourth quarter, but the struggling electronics giant promised better times ahead.

Still, investors sold off Sony ADRs following the news. In recent trading, they were off 69 cents, or 1.3%, to $51.60.

The wider loss was due largely to a difference in taxes paid compared with a year ago; the company's operating loss was narrower year over year on a modest increase in sales.

In the quarter ended March 31, Sony lost 66.53 billion yen (about $569 million), or 66.48 yen a share, on 1.85 trillion yen in total revenue. In the same period a year earlier, the company lost 56.5 billion yen, or 59.40 yen a share, on total revenue of 1.7 trillion yen.

For the full year, Sony earned 123.6 billion yen, or 116.88 yen a share, on 7.48 trillion yen of revenue. Sales were up, but income was down from the previous fiscal year, when the company earned 163.8 billion yen, or 158.07 yen a share, on revenue of 7.16 trillion.

Looking forward, Sony expects to earn 130 billion yen on 8.2 trillion yen in revenue this fiscal year.

The top-line improvement in the just-completed quarter was due largely to favorable exchange rates for the international company rather than improving sales, the company said. Without those fluctuations, the company's sales would have been up just 2%.

But the company's bottom line didn't tell the whole story, either. The company's wider loss was the result of taxes. In the year ago period, Sony recorded a 5.33 billion yen tax credit, while in the just-completed quarter, the company allotted 23.57 billion yen to taxes.

Before taxes, the company's operating loss shrank from 77.41 billion yen in the year-ago quarter to 62.2 billion yen in the just- completed one.

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Sony's various operating segments saw mixed results in the quarter. The loss posted by its core electronics business narrowed to 91.89 billion yen from 100.46 billion yen a year earlier as sales increased about 3% to 1.22 trillion yen. Sales to outside customers -- as opposed to intra-company sales -- actually increased 9% for the electronics segment to 1.16 trillion yen. During the quarter, the company saw strong sales of its PCs and LCD televisions.

The company's results were also buoyed by strong performance at its film and financial services divisions. Operating income at the film division jumped 120% to 30.2 billion yen as sales increased 26% to 240.38 billion yen. Boosting results were the company's television efforts, particularly results from some of its international channels and sales of its library of television shows.

The financial services division saw earnings skyrocket 387% to 79.31 billion yen as revenue rose 43% to 223.13 billion yen.

Those divisions helped counteract worsening results from the company's game segment. That segment, which produces video game hardware such as the PlayStation 2 and makes and licenses video game software for those machines, saw sales fall 31% to 152.3 billion yen. Meanwhile, the division posted a 61.4 billion yen operating loss compared with an operating profit a year-ago of 1.49 billion yen. Sony attributed the deterioration to a fall-off in sales of the PlayStation 2 and to stepped-up investments in the upcoming PlayStation 3.

Shipments of the PlayStation 2 fell off a cliff in the quarter, according to Sony's data. The company shipped 2.32 million units of the game machine worldwide in its fiscal fourth quarter, compared with 6.08 million in the same period a year earlier. Global shipments of the PlayStation Portable also tailed off in the quarter, tallying 2 million units, compared with nearly 2.5 million a year earlier.

The game industry is in the middle of a transition to new game hardware. Competitor


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has already released its Xbox 360 console, while Sony's PSP is duking it out on the handheld front with